Agribusiness Review - Vol. 8 - 2000

Twan Huybers
(University of New South Wales)
and Jeff Bennett
(Australian National University)

October 12th, 2000

Abstract

In this paper, the results of a survey of nature based tourism operators in Tropical North Queensland are presented. While operators compete with each other for the business of the tourists who visit the region, they cooperate in their collective competition with other tourism destinations. The paper documents the historical development of competition and cooperation in the region's tourism industry. It also discusses the areas of cooperation between tourism business operators. The two major areas of cooperation are destination promotion and activities regarding environmental protection.

In neoclassical economic theory, the focus of industry analysis is mainly on the manner in which firms compete with each other as determined by various characteristics of the market structure. While cooperation is analysed as well, this is generally done in terms of collusion between firms in an oligopolistic structure. It is associated with the presence of cartels in which firms attempt to set prices at or near monopoly levels.

However, business relationships in an industry are often simultaneously competitive and cooperative. This is captured by Brandenburger and Nalebuff (1996) in the notion of "co-opetition". It is closely related to Marshall's (1920) concept of industrial districts. More recent publications in which industrial districts and regional clusters are investigated include Best (1990), Pyke and Sengenberger (1992), Herrigel (1996), Schmitz (1999), Enright (1998) and Porter (1998). In an industrial district or geographical cluster, firms within the region compete with each other in certain areas on the basis of their individual strengths while they engage in collective inter-regional competition based on the region's distinctive features. The latter gives rise to cooperative arrangements between firms within the region. The dual notion of inter-firm competition and inter-firm cooperation is also consistent with Richardson (1972, 1998) in which cooperative relationships between firms are explained by the firms' relative distinctive capabilities.

The notion of simultaneous competition and cooperation can be applied to a tourism destination. Tourism businesses share the common goal of attracting visitors to their region. Together they produce the destination's tourism product and, in that respect, they are in joint competition with other tourism destinations. However, they also compete with each other for a market share of the tourists that visit the region. This gives rise to cooperative and competitive relationships between tourism businesses in the region. In this paper, the focus is on the cooperative relationships between tourism operators in Tropical North Queensland. To the best of the authors' knowledge, it is the first attempt to investigate this issue for that region.

The paper is structured as follows. In the next section, details of the industry survey are presented. It also describes Tropical North Queensland and its tourism industry. The historical development of cooperation and competition between tourism businesses in the region is presented in Section 3. In Section 4, the cooperative arrangements in Tropical North Queensland's tourism industry are discussed in more detail. Finally, some concluding comments are offered in Section 5.

2 - The survey and Tropical North Queensland's tourism industry

2.1 Tropical North Queensland's tourism industry

Tropical North Queensland extends north to Cape York peninsula, west to the Gulf Savannah, and south to Cardwell. 2 The region's prime tourist attractions include the World Heritage listed Great Barrier Reef and Wet Tropics rainforests. These natural assets are complemented by the other features of the region's tourism product. They include the tropical climate; the high-quality experiences and adventures; the access to Aboriginal culture; the close proximity of accommodation to natural assets; and the easy access to a major international airport (Brand Far North Queensland 1996).

Tropical North Queensland's tourism industry comprises hundreds of businesses directly or indirectly associated with tourism activities. 3 The industry can be broadly divided into the land-based and marine tourism sectors. The vast majority of tourism operators are small businesses, as is the case for the tourism industry in Australia overall. The size of the marine and land-based tourism operators in the region ranges from small, employing no more than one or two people, to large, with up to 300 employees.

Table 1 shows the range of products offered in the various tourism sectors in the region. The marine tourism sector is dominated by a small number of large operators. The supply of reef tourism services is heavily concentrated in the hands of four large companies that cover about three-quarters of the region's total annual number of visitors to the Great Barrier Reef. These companies offer mainly the large-scale mainstream day tours to the Reef. A typical day trip to the reef comprises travel to a site on a fast catamaran; meals on board and on the pontoon; a guided tour on a semi-submersible and/or glass-bottom boat; free snorkelling equipment; and optional scuba dive(s). 4

Medium sized and small sized operators share the remainder of the reef visitor market. Many of these operators offer the mainstream product but on a smaller scale using smaller vessels. Other small and medium operations provide various other types of tours and activities on the Great Barrier Reef including specialist diving tours (on a day basis as well as extended trips), extended non-diving tours, and fishing trips.

With respect to land-based tour operations, there are three large companies offering both day tours and extended rainforest and outback tours. 5 Although data indicating the dominance of the large businesses in this sector could not be obtained, feedback from operators suggested that this did not reach the same degree as in the marine sector. The variety of land-based tours is relatively wide and includes day trips to Cape Tribulation and Daintree National Park, the rainforest village of Kuranda, the Atherton Tablelands, various adventure tours (including white water rafting and kayaking), wildlife and bird watching tours, and extended safaris to Cape York.

The Cape Tribulation-Daintree day tour is the major mainstream trip on the land and is offered by some 45 regional operators. This day tour generally includes visits to Mossman Gorge, Daintree National Park, Cape Tribulation beach, as well as other options including a visit to the Rainforest Habitat wildlife sanctuary. A second day tour consists of various combinations of trips to Kuranda village, Tjapukai Aboriginal Cultural Park, and the Rainforestation Nature Park using different combinations of modes of transport including coach, scenic railway and the Skyrail rainforest cableway. A third day tour comprises the Atherton Tablelands which generally includes the villages of Atherton and Yungaburra, the waterfalls circuit, and the crater lakes.

2.2 The survey

The data employed for the current investigation were collected during a field study in North Queensland that took place in May 1999. The field study comprised a survey consisting of in-depth face-to-face 6 interviews of 29 tourism business operators and other stakeholders. There were two reasons for choosing the interview format and not that of a mail-out questionnaire. Firstly, the interview format was more appropriate given the open-ended nature of the questions to be asked and the required depth of the responses. The chosen survey format was flexible as it allowed follow up questions, for instance in cases where a response was not sufficiently clear or specific. These clarification questions would not have been possible in the case of a static questionnaire format.

Secondly, it was well established that tourism operators in the region had been subject to many questionnaires before and during the principal author's visit to the region. 7 Regional tourism industry representatives and academics familiar with the region's tourism industry had made it clear to the authors that a low response rate and/or poor quality of responses could be expected from a mail-out survey. This would especially be the case given the relatively complicated issues under investigation. Faced with a trade-off between a smaller sample and a high quality of responses, and a potentially larger sample with responses of lower quality, the interview format was chosen.

Feldstein (2000, iii) discusses the relative merits of using this direct observation and interviewing approach, and concludes "that the process of visiting companies, looking at production, and asking questions is an unusual part of economic research. It seems like such a natural thing to do. But as economists all know, it is unusual. (…) I think that is a pity."

Similarly, The Economist (2000) encourages economists to "venture out of their ivory towers", because "since economists are ultimately trying to describe human behaviour, meeting real people ought sometimes to help." Helper (2000) discusses the advantages of field research, and the potential problems of objectivity, replicability and generilisability in qualitative research. 8 She makes the observations that "no methodology is perfect" and quotes David Levine on the problems associated with quantitative research: "Regressions also have serious problems of generalizability (…), subjectivity (…), and measurement error."

As shown in Table 2 below, the majority of survey subjects were representatives of a cross section of tourism businesses in the region. These were owner/operators, managing directors, or sales and marketing executives of both marine and land-based tourism businesses. 9 This included large businesses, and small to medium sized operators. 10 The businesses were all run from their Cairns or Port Douglas based offices. Their operations, however, cover the whole Tropical North Queensland area. In addition to tourism businesses, the sample included two representatives of tourism industry associations, and three officers of the government agency involved in the protection of the region's natural areas. The somewhat limited sample size is due to business operators' time constraints and their reluctance to participate in "yet another survey". However, given the coverage of the sample, the survey responses were deemed sufficiently representative to infer overall industry perceptions on relevant issues.

Table 2 Survey respondents

Sector

Total

Large

Medium

Small

Marine tours

9

4

2

3

Land-based tours

11

2

5

4

Accommodation

4

2

2

Tourism industry representatives

2

Environmental Protection Agency

3

Total

29

8

9

7

Interviewees were initially contacted by telephone and were subsequently visited by the principal author. Interview times varied from one hour to more than two hours. The interviews were conducted in a structured fashion covering a number of survey topics determined in advance. Each of the topics was introduced by an open-ended question. Depending on the initial response, follow-up questions were asked. As a result, the number of topics and the emphasis on the various topics covered in the interviews varied between respondents. Also, because of time constraints and relevance, not every question was asked of every respondent.

Given the qualitative nature of most of the information gathered and the size of the sample, the survey responses were not amenable to numerical or statistical analysis. The findings are, therefore, generally qualitative and descriptive. In the analysis that follows, quotes from interviews are presented. Since the interviewees were assured of the confidentiality of their responses, the quotes are identified by respondent group only: "L" for land-based tour operators, "M" for marine tour operators, "A" for accommodation operators, "I" for industry representatives, and "R" for regulatory agency officers. In addition to the qualitative data obtained from the interviews, various reports were collected. Relevant findings from these publications are also presented.

In this section, the competition-cooperation nexus regarding tourism business relationships in Tropical North Queensland's tourism industry is presented in a historical context. Five broad eras emerged from the survey. These time periods, shown in Table 3, are generally related to the growth and popularity of the region as a tourist destination since the early 1980s.

Table 3 Tropical North Queensland tourism industry; history of cooperation and competition

Time Period

Characterisation

Background

Early 1980s

Strong cooperation

Pioneers

End 1980s

Competition and opposition

Initial phase of strong tourism growth

1989-90

Cooperation

Pilot strike

Early to end 1990s

Reduced cooperation

Second phase of strong growth

End 1990s

Increased cooperation

Growth slowdown; "crisis"

The history of cooperative and competitive relationships in the region's tourism industry is also depicted in Figure 1. This figure shows, on the vertical axis, a continuum from opposition to competition to cooperation. This continuum is a compressed variant of the one in Easton and Araujo (1992) who identify five "stereotypical points" to classify relationships between organisations: conflict, competition, co-existence, cooperation and collusion.

During the 1980s, when the region's popularity as a holiday destination started to develop, the region's tourism product consisted of relatively few products offered by a relatively small number of operators. The Far North Queensland Promotion Bureau (the official name of the regional promotion agency which now trades as Tourism Tropical North Queensland) and a collection of different operators went on regular domestic and overseas missions to promote the region. The operators represented the different industry sectors in the region including reef and accommodation operations. This group presented itself as a strong unit in their promotion of the region. The cooperative and well-organised nature of the missions was intended to show the wholesalers how easy the organisation of a holiday package to the region would be.

"There was real cooperation between tourism businesses. Real camaraderie and an entrepreneurial spirit. (…) During tourism missions overseas, competitors' brochures were shown as well, as long as visitors could be attracted to the region." (I1) 11

The high degree of cooperation at the early stages of tourism development in the region is consistent with the evolutionary model of tourism partnerships developed by Selin and Chavez (1995). ‘Common vision' is identified as an important driving force for the establishment of tourism partnerships to reach collective goals.

The cooperative spirit started to wane with the strong growth of tourism in the region during the latter part of the 1980s. New businesses were attracted to the region and new products were developed. This led to a high degree of competition for intra-regional market share. The new companies adopted a competitive strategy based, initially, on two fronts. The first aspect was a focus on price competition in order to establish a strong entry position in the market. According to the incumbent operators at the time, the new companies were able to do this by compromising on quality while at the same time exploiting the good reputation of existing operators in the region. The second prong of the new firms' competitive strategies was the establishment of vertical partnerships. Strategic alliances were formed between operators in order to offer inclusive holiday packages. A typical strategic alliance included a reef operator, a land-based tour or transport operator and one or more accommodation operators.

As a result of the new competitive situation, incumbent tourism operators were forced to join the trend of aggressive pricing strategies and forming partnerships. When this response resulted in arresting the increase in market share of the new companies, the latter introduced a third element of their competitive strategies. This constituted operators promoting their own products first, before the region, and discrediting their regional competitors in representations to wholesalers and in other representative forums. This had negative consequences for the region's reputation as a strong collective regional unit:

"[Cooperative promotion] had changed; a lot more bitchiness developed. People would start their sales pitch to wholesalers with their own product." (L3)

"The local industry had become too fragmented. A lot of new quick buck merchants emerged, who did a lot of harm to the region." (L11)

"Firms started discrediting their competitors. This proved detrimental to all." (M1)

The 1989 Australia wide pilot strike caused temporary renewed growth in regional cooperation. In the aforementioned evolutionary model of tourism partnerships of Selin and Chavez (1995), ‘crisis' is singled out as a significant determinant for inter-firm cooperation. This applied to businesses directly involved in tourism as well as supporting industries. It led to more significant, collective international promotion activities compared to other Australian destinations. As one operator put it:

"Even the baker and the butcher thought they were in tourism." (L11)

From the early 1990s through to the middle of that decade, (international) growth of Tropical North Queensland as a tourist destination increased dramatically. Respondents pointed out that this second wave of strong tourism growth did not lead to destructive strategies of opposition within the region as it had done during the first wave of growth. It did, however, lower the industry's collective activities, including promotional efforts, as complacency among tourism industry members developed:

"Around the middle of the 90s, everything seemed too easy." (L11)

The economic downturn in East Asia, starting in 1997, and the general fall in the demand for tourism in Tropical North Queensland at the end of the 1990s appeared to change the mindset of many tourism businesses in the region. At the time of the survey, the realisation of the necessity of more cooperation seemed to have reappeared among operators:

"The region now really has to work for it. It is no longer an automatic attraction." (L3)

"Now we are again in a crisis and the industry seems to be banding together again." (L9)

"During the ATE 12 , Tropical North Queensland was presented as one unit; it was the best of all the regions in Australia. That has an enormous positive influence on wholesalers who were very impressed." (L11)

Respondents indicated that history had shown that a collective approach was required to achieve sustained growth of tourism in the region. It was suggested that this was facilitated by the relatively small size of the regional tourism industry community. Respondents highlighted the frequent, informal contacts between tourism operators in the region. This type of communication had provided the foundation for cooperation at very low transaction costs. Peer group pressure in small groups helps to reduce free-riding activities as the latter are more easily exposed. In addition, the repeated nature of cooperative activities created a situation of trust in which cooperative behaviour could be predicted reasonably confidently. This is in accordance with the literature on industrial districts and clusters. For instance, Porter (1998, 80) argues that "…the proximity of companies and institutions in one location – and the repeated exchanges among them – fosters better coordination and trust.". It is also consistent with the game theoretic notion of cooperation in repeated games (see, for example, Axelrod 1984).

With a view to the future, respondents acknowledged that opportunistic behaviour could not be excluded. However, the general opinion among respondents was that the cooperative spirit, which had traditionally existed among the early operators in the region, had extended to the more recently established tourism businesses.

"Cooperation is there in times of crisis." (L9)

"The tourism people in the region stick together. They believe in what they are doing." (L5)

"[Tourism operators in the region] will cooperate to respond to changes in the market place." (M1)

The survey result of the tendency towards cooperation in the cooperation-competition nexus with respect to Tropical North Queensland is consistent with the findings of Tourism Queensland (2000). This investigation of Queensland wide environmental tourism, carried out at around the same time as the present survey, established that "whilst competition exists within the industry, the level of competition is somewhat less than that experienced in mass tourism sectors". One important reason to which this result was attributed is "the development of mutual working relationships between operators to help lift the standards and improve market prospects generally."

As shown in Figure 1, the effect of strong regional tourism growth on business relationships was different in the two growth phases. While the first one was characterised by destructive opposition through destabilising strategies of opposition and conflict, the second one resulted in a lower degree of cooperation. This suggests that a continued environment of (increased) intra-regional cooperation may be possible in the future (i.e. development paths a or b ). This outcome is one of the four multi-firm alliance game scenarios discussed in Hwang and Burgers (1997). In this scenario, called ‘sticky mountain', there are incentives for firms in an industry to cooperate once a critical mass of cooperation has been reached.

On the other hand, a situation of more rigorous competition or opposition could return in accordance with the ‘circle dance' scenario identified by Hwang and Burgers (1997) (development path c ). The latter describes a situation in which firms switch between cooperation and non-cooperation given the presence and absence of an external threat. With the extent of the Asian financial crisis less damaging than expected, and the apparent absence of another crisis, a renewed period of tourism growth could render the prevailing cooperative business environment less stable and less sustainable in the future.

In the previous section, the generally high degree of cooperation between tourism business operators in Tropical North Queensland was established. In this section, those cooperative relationships are considered in more detail. To this end, the taxonomy of inter-competitor cooperation developed in Easton and Araujo (1992) is useful. In this classification, cooperation between competitors is divided into formal and informal arrangements. The former refers to planned or managed activities including dyadic relationships (such as ownership linkages and subcontracting); joint activities including R&D and promotion; and joint investment in third parties including trade associations. Informal cooperation comprises the transfer of people, and the sharing of information and social norms. In addition to Easton and Araujo's taxonomy, cooperative relationships may be divided into structural (or regular) and ad hoc (or case by case) arrangements. These can be both formal and informal.

The survey responses revealed a number of areas of regional cooperation between operators in Tropical North Queensland. These comprise collective promotion, environmental protection, and a few other cooperative arrangements. Each of these is now discussed separately.

4.1 Collective destination promotion

Destination promotion may be subject to market failure (Access Economics 1997). It is an example of Olson's (1965) collective action problem with the potential for opportunistic free riding behaviour (Palmer and Bejou 1995). Yet there is evidence of destination marketing organisations that collectively develop marketing strategies which are only partly funded by government or totally privately funded (Healy 1994, 606). Porter (1998, 82) observes that there are various complementarities in a tourism cluster including the one whereby "beyond reputation, cluster members often profit from a variety of joint marketing mechanisms, such as company referrals, trade fairs, trade magazines, and marketing delegations."

The existence of largely privately funded destination marketing organisations implies that appropriate institutional arrangements are in place that alter the pay-offs for the individual parties involved. In other words, it suggests that the perceived individual benefits of joint promotion exceed the costs involved.

Collective promotion of Australian holiday destinations follows a hierarchical structure. At the two most aggregate levels, promotion is carried out by government agencies. While the Australian Tourist Commission deals with the promotion of the Australia wide tourism product, the promotion of the various states and territories is carried out by their respective government tourism agencies including Tourism Queensland. At the regional level, the various destinations within Queensland are collectively promoted by their regional tourism organisations including Tourism Tropical North Queensland (TTNQ).

Survey respondents indicated that collective promotion was an important element of the cooperative activities of tourism operators in Tropical North Queensland. This referred to collaborative promotion initiatives under the umbrella of TTNQ. In the above taxonomy, this is a formal type of cooperation which is organised and carried out in a structural fashion.

Collective promotion is consistent with the literature on industrial districts and clusters, for instance with Porter's above observation. It also conforms with Best (1990) and Enright (1998) who argue that successful regional clusters are built on cooperation regarding generic promotion.

The Far North Queensland Promotion Bureau was founded in the mid-1970s as a general economic development board for the Far North Queensland region. Driven by growth in, and the increasing dominance of, tourism in the region, it gradually evolved into a tourism focused organisation. Approximately one third of TTNQ's revenue is funded by government at all levels (including 16% from Tourism Queensland) while around half of its revenue is membership related (Tourism Tropical North Queensland 1998).

Approximately 95 percent of TTNQ's members are tourism businesses. The remaining five percent comprise supporting businesses in the region. Membership can be held at various levels, ranging from entry level ($550 p.a.) to gold level ($12,000 p.a.). The vast majority of membership is held at entry level. In 1997-98 around 90 percent of membership was at the entry level which represented 45 percent of industry membership income (Tourism Tropical North Queensland 1998). On the other hand, six percent of membership contributed 47 percent of membership income.

The main promotion activities undertaken by TTNQ comprise organisation of and representations at domestic and overseas tourism and travel events. These include promotion missions in cooperation with the Australian Tourist Commission and Tourism Queensland, as well as with airlines. On many occasions, sales missions are undertaken in conjunction with TTNQ members. The main objective of the promotion missions is to develop contacts with travel agents and wholesalers and to create and enhance these crucial intermediaries' awareness of the quality and diversity of the region's attractions.

Most operators were involved in collective promotion activities coordinated by TTNQ. This pertained to either a passive involvement by paying the membership fee only, or actively joining TTNQ on promotion missions. In addition, operators undertook a different type of joint promotion activity during travel shows and similar representative forums. At events like the annual Australian Tourism Exchange, Australian tourism operators have the opportunity to present themselves to hundreds of overseas wholesalers. Significantly, respondents emphasised that during the meetings with intermediaries, the region Tropical North Queensland was promoted before their individual business or products:

"In the first five minutes of our promotion talk with a wholesaler we explain the attractions and infrastructure of the region, then we talk about [our company]." (L10)

"We always sell the region before the company when we talk to agents." (L5)

"We sell the destination before the product, for example during trade shows." (M4)

Promoting individual products as part of the region was due to operators' perceptions that they do not have a lot of individual influence on inter-destination competition. However, in addition to the notion of cooperative promotion for collective benefits, respondents also indicated that there were immediate, individual incentives to display a cooperative attitude and to provide cross-recommendations at trade shows. A wholesaler's job of assessing the opportunities for packaging holiday components in a region is accommodated if individual operators provide the intermediary with an overall picture of the region. This implies that wholesalers are generally less inclined to do business with operators who only promote their own products.

Several operators indicated that, while they paid their TTNQ membership fees, their active individual promotion activities related to intra-regional competition only. Hence, these businesses, in effect, relied on the promotion activities of TTNQ and of other businesses for the size of the region's "visitor pie". Subsequently, they then competed for their slice of the market.

Some operators expressed their disappointment at the refusal of other businesses to become more actively involved in joint inter-regional promotion:

"There is quite a bit of free-riding going on; and not only by the smallest [operators]." (L1)

"They attract business by default." (L11)

However, it was also acknowledged that some companies were not in a position to direct scarce resources towards extensive promotion efforts:

"Some of them don't have the marketing budgets that are needed." (L11)

At the time of the survey, there were some rumours of a possible break-away group of operators in the region who felt that TTNQ had not given them sufficient opportunity to become involved in collective promotion missions. One operator remarked that wholesalers were given a misrepresentation of what the region had to offer to prospective tourists:

4.2 Environmental protection

The second major area of cooperation between tourism operators in Tropical North Queensland pertained to the protection of the region's environment. Huybers and Bennett (1997) established the importance of the natural environment to Australia's tourism industry. The current survey results confirmed that this applies strongly to Tropical North Queensland in particular. All respondents clearly perceived the high quality of the region's natural attractions as the key strength of Tropical North Queensland's tourism product relative to other holiday destinations. The reef and the rainforest were either mentioned explicitly or the region's natural assets were referred to in general. Tropical North Queensland was seen to have positioned itself in a strong domestic inter-regional niche as a nature based destination as opposed to the two other main domestic destinations Sydney ("city attractions") and the Gold Coast ("theme parks and shopping"). With respect to international inter-regional competition, respondents perceived the environmental reputation of Tropical North Queensland to be more and more important as a selling point to international wholesalers. The above survey findings are consistent with advertising lines used in the promotion of the region such as "Where rainforest meets the reef" and "Clean, Green, Timeless… and a million years in the making".

Respondents were also asked to give their views on their expectations of the future competitive strengths of Tropical North Queensland's tourism. While there was room for diversification of the region's tourism product, for instance regarding indigenous tourism, natural attractions were seen to remain the region's main tourism assets in the future.

"Natural attractions will always be the core." (I1)

"What [the region's tourism industry] will resist, forever, are man-made attractions like Seaworld or Movieworld. We will never support it." (I2)

Respondents emphasised that the viability of this scenario depends on the sustainability of the region's environmental quality. This, in turn, was seen to depend crucially on intra-regional cooperative environmental protection to manage the effects of the region's growth on the quality of the environment. Intra-regional cooperation with respect to environmental protection is relevant in two ways. Firstly, tourism operators in Tropical North Queensland are subject to regulations to protect the region's natural environment. Tourism operators are represented in the consultation process with regulating government agencies. Representative bodies may be classified as formal and structural types of cooperation of the industry. The second kind of cooperation pertains to complementary industry level self-regulation of environmental protection activities, and the informal monitoring activities that are carried out by operators. Both types of cooperation are now discussed. 13

Representation in consultations

Various government agencies are involved in planning, decision making and monitoring with respect to Tropical North Queensland's natural environment. The main agencies with respect to the region's tourism industry are the Great Barrier Reef Marine Park Authority (GBRMPA), the Wet Tropics Management Authority and the Queensland Environment Protection Agency. The core of the regulatory framework for commercial operators, which is based on various acts and regulations 14 , is the tourism operation permit system. In order to qualify for a permit, an operator is bound by various stipulations and conditions regarding their environmental behaviour as set out in zoning and management plans (see, for instance, Great Barrier Reef Marine Park Authority 1998, and Queensland Department of Environment and Heritage 1995). The permit criteria for marine operators include regulations regarding anchoring and mooring, and sewage discharge. The condition for land-based operators include restrictions with respect to the gathering of animals or plants, pollution and littering, the use of hardened sites, and exclusive use of a site.

The government acknowledges the importance of cooperation between regulatory authorities and the region's tourism industry. For instance, under ‘key regional issues' the FNQ 2010 report states that "the industry and all levels of Government need to work co-operatively to maximise tourism opportunities while avoiding or minimising tourism impacts." (Far North Queensland Regional Planning Advisory Committee 1998, p. 63). With respect to the Great Barrier Reef, GBRMPA encourages "cooperative working arrangements among the management agencies and Marine Park stakeholders." (Great Barrier Reef Marine Park Authority 1998). A practical example of this principle is GBRMPA's advisory body, the Tourism Advisory Group, in which the tourism industry is represented. Further, the policy document of the Wet Tropics Management Plan, entitled Protection Through Partnerships has a strong focus on cooperative management approaches and codes of practice. The Wet Tropics Management Authority has a structure of three liaison groups including the tourism industry group.

The above examples suggest that the government acknowledges that industry participation in the regulatory process is required to achieve the goal of environmental protection. It is an acknowledgement of the notion that the effectiveness of environmental regulations is ultimately determined by operators' behaviour. Consultation with the tourism industry - and other stakeholders with an interest in the region's environmental sustainability – includes industry input into the development of initial regulations and subsequent changes made.

Regulatory agency survey respondents indicated that the cohesion among tourism industry members regarding environmental protection had improved since the end of the 1980s. Consultation with the tourism industry was now well established and developed. For instance, the Wet Tropics Management Plan and the Cairns Area Plan of Management were developed after extensive consultation with the tourism industry. Regarding the latter, the ‘Association of Marine Park Tour Operators' (AMPTO) was perceived as an important partner in the regulatory process. AMPTO is the main representation vehicle for the marine tourism sector in the region.

Government agency staff also indicated that the scope for a co-regulatory relationship had also improved following the emergence of Reef Tourism 2005 as the latter adopted long term views of the sustainability of the industry. The Reef Tourism 2005 project, set up in 1995, is a joint initiative between marine tourism operators and government aimed at ecologically and economically sustainable management of marine tourism in the Great Barrier Reef World Heritage Area.

Operator respondents acknowledged the importance of a good working relationship between the industry and regulatory agencies. However, this was seen to be effective only in case of a partnership in which the parties act on an equal basis. This was perceived to be lacking to a large extent. Operators expressed the view that the regulatory agencies did not appreciate sufficiently that operators' long-term business prospects were closely related to the quality of the environment:

"They are non-business people with a narrow view, who don't see that money making and the environment go hand in hand." (M3)

While tourism is widely acknowledged as an appropriate means to achieve environmental sustainability through interpretation and education, operators were of the opinion that regulating authorities perceived the industry as a threat to the protection of the environmental assets:

"Tourism is a great vehicle for presentation of World Heritage values, so [the authorities] shouldn't shut commercial tourism out. But all they want to do is lock up and protect." (M2)

"It seems as if [the authorities] think that they are doing us a favour by letting us operate in the parks." (L2)

"I understand why [the authorities] think that way, because there are maverick operators out there. But they don't realise that we are in this together, so they should encourage tourism's involvement." (L11)

This sentiment provided the background to the formation of the ‘Alliance for Sustainable Tourism'. The Alliance is a representative regional industry group that was founded as a countervailing power to the perceived strong influence of environmental groups on government policy. The Alliance includes representatives from various other tourism associations including TTNQ, the Far North Queensland Tourism Operators Association 15 , and the Inbound Tourism Operators Association.

The Alliance, AMPTO and other regional industry bodies perform an important task for the tourism industry in relation to environmental regulatory authorities. Their aim is to convince the authorities of the industry's interest in, and ability to contribute to, long-term sustainability of the region's environment. They represent the industry's view that this can be achieved through cooperation with the industry in a co-regulatory manner.

Industry self-regulation and informal policing

Compliance with official environmental regulations is policed by a system of monitoring and enforcement activities by the regulatory authorities. This includes patrol vessel policing and aerial surveillance on the reef, and monitoring activities by rangers in the National Parks. However, it is generally acknowledged that government policing alone is not sufficient to attain the goal of sustainability of the use of the region's natural assets. The vastness of the areas to be monitored renders effective monitoring financially prohibitive. Hence, for instance, GBRMPA "has looked to the self-interest of tourism operators to complement its regulatory instruments. […] Tourism on the Great Barrier Reef provides one of those relatively rare opportunities where the incentives facing tourism operators are closely aligned with those of the regulator." (Tourism Review Steering Committee 1997, p 31).

It is recognised, by land and marine regulatory authorities, that there are commercial incentives for operators - especially for those visiting particular sites regularly – to protect the environmental quality of the assets. Potential complementary vehicles to attain the goal of environmental and economic sustainability include self-regulatory mechanisms like industry initiated codes of conduct; as well as accreditation, and education and training.

There was a clear view among operators of the limited relevance of the environmental regulations to their environmental behaviour. The environmental standards that most operators in the industry set for themselves were very high. There was a clear realisation that the environmental assets were, and would continue to be, the basis for the region's tourism industry and hence for their own businesses.

"It is our main asset. We don't want to ruin it." (M3)

"Look, the environment is and will be the industry's biggest asset. So we have an incentive to look after it." (L9)

Operators' responses showed that formal sanctions associated with environmental regulations were not very relevant to their environmentally responsible behaviour.

"If being caught and penalised by [the authorities] was my only concern, I would have nothing to fear. There is so little policing out there." (L1)

Instead, informal sanctions and social control among the operators were perceived to be crucial in that respect. This is in accordance with institutional economics insights regarding common property resource use (see, for instance, Bromley 1992, Libecap 1995 and Ostrom 1990, 1998). Collective benefits for the joint users of a common property resource require an institutional structure that reduces or eliminates the incentives for opportunistic behaviour. This provides the basis for a triangle of trust, reciprocity and reputation among joint resource users (Ostrom 1998). With respect to a nature based tourism destination, this is also consistent with the concept of the industrial district or cluster. The repeated nature of interactions between individuals is facilitated by the close proximity of firms in the region. It can be complemented by the credible threat of informal enforcement, which is easier when the parties are geographically proximate.

Respondents indicated that there were various unwritten, as well as some written, codes of conduct that were followed voluntarily by the vast majority of tourism operators. It was acknowledged that there were operators in the industry whose activities damaged the natural environment. For instance, some marine operators anchored directly onto the reef while others, both on the land and on the Reef, disposed of waste or littered in an improper fashion. The close social control among operators, combined with potential informal industry sanctions, was often sufficient to bring the activities into line with environmentally responsible business activities. In cases where this had not worked, for instance regarding renegade operators who had no regard for the common goal of long-term sustainability of the natural assets, operators had been reported to the authorities.

"There is the odd cowboy around. But we are a small community, so there is strong social control. They are told: ‘What are you doing? Don't do that again!' We prefer this to dobbing them in." (M6)

"We have a moral and a commercial obligation to report violations." (L11)

This high degree of self-interest had manifested itself in an equally high degree of voluntary self-regulation in the industry and a sense of overachieving in comparison with environmental standards required by official regulations. Several operators pointed out that the stipulations associated with the permit system were merely treated as part an administrative procedure to be followed rather than the driving force behind operator activities.

Voluntary cooperative environmental protection activities in the region's tourism industry are particularly evident in the marine sector. This includes the voluntary codes of conduct for a number of sites on the Reef. The self-imposed stipulations regarding activities at Cod Hole and on Michaelmas Cay are accepted and adopted by operators. Another example is the cooperative monitoring program Eye on the Reef which was an outcome of the Reef Tourism 2005' project. Under this program, tourism operators' employees complete relatively simple, i.e. non-scientific, weekly forms about the quality of the coral and submit these to GBRMPA. The program serves a dual purpose. It provides important data to GBRMPA with respect to the Reef's quality, and it creates an involvement of employees in the monitoring of the reef.

4.3 Other areas of cooperation

A number of other cooperative arrangements between tourism operators exist in the region. Some areas of ad hoc cooperation identified by respondents may be classified as informal. One example pertains to mutually beneficial cross-recommendations of operators to tourists. This applies particularly to small and medium sized land-based adventure and ecotourism operators. Other businesses' products are usually recommended when an operator's own tour is fully booked and tourists want to go on a similar tour on a specific day.

Another instance of informal, ad hoc cooperation pertains to assisting other operators in case of a breakdown in equipment or during emergency situations. This applies in particular to businesses whose operations occur in locations where general assistance is difficult to obtain, i.e. land-based businesses operating extended outback safaris as well as marine operators. The outback operators indicated that this created a special kind of bond between competing businesses.

A somewhat more formal but still generally ad hoc type of cooperation is the sharing of clients between operators. This applies mainly to the land-based operators, both large and small, and generally in off-peak season only. If the number of bookings for a tour is small, tourists are given the option of going on a tour with another company. The initial operator then makes the necessary arrangements with the alternative operator – including an agreement about the price charged - and receives payment from the tourists. Outback safaris are among the tourism activities where this practice occurred most frequently.

Regional cooperation also includes formal cooperative arrangements regarding the development of the regional tourism product. For that purpose, the Far North Queensland Promotion Bureau/TTNQ has been the key representative tourism body. As discussed above, its main mission has been to provide the cooperative promotion framework for the region. However, it has also been involved in regional tourism product development. During the early development of the region as a tourist destination, the Bureau had a major input into government planning of the region. The then existing tourism support infrastructure (roads, water supply, etc.) was inadequate to accommodate the expected growth in tourism. More recently, the Bureau/TTNQ was the driving force behind the broadening of the region's tourism product base including the development of the casino, the convention centre, and cultural attractions. 16 The tourism industry's active participation was acknowledged in the FNQ 2010 Steering Committee Report on Tourism which states that "the tourism industry has become increasingly involved in the planning and development of the tourism product on a holistic level that seeks to incorporate a regional industry vision." (Regional Tourism Strategy Management Team 1997, 78).

The relationships between tourism operators in Tropical North Queensland are simultaneously cooperative and competitive. The interactions between firms are cooperative when they are beneficial to the attractiveness of the region as a whole. In other words, inter-regional competition between Tropical North Queensland and rival destinations is the impetus for intra-regional cooperation. The survey showed that the two main areas of cooperation were joint destination promotion and the protection of the region's environmental assets. The two are closely related as the focus of Tropical North Queensland's promotion as a tourism destination, both domestically and internationally, is on the environment as the main tourist attraction.

It is in the tourism industry's interest to retain the quality of the region's environmental assets to foster the prosperity of the industry's businesses. To this end, the industry engages in collective representations with respect to regulatory authorities. Also, complementary to environmental regulations and policing, tourism operators carry out self-regulatory activities regarding environmental protection and informal monitoring of the environmental behaviour of industry members.

The survey findings show that it is too simplistic to view Tropical North Queensland's tourism industry structure as consisting of rival firms that behave purely competitively. The dynamics of competition and cooperation are influenced by the institutional structure of formal and informal cooperative networks in the relatively small community of tourism operators.

Access Economics 1997. The Economic Significance of Travel and Tourism & Is There a Case for Government Funding for Generic Tourism Marketing? Canberra: Tourism Council Australia, Property Council of Australia, Tourism Task Force.

Feldstein, M. 2000. ‘Preface: The NBER-Sloan Project of Productivity Change'. In Industrial Technology and Productivity: Incorporating Learning from Plants Visits and Interviews into Economic Research . Papers presented at the Annual Meeting of the American Economic Association, January 2000.

1 - An earlier version of this paper was presented at the 44th Annual Conference of the Australian Agricultural and Resource Economics Society in Sydney, 23-25 January 2000. The comments of two anonymous referees are gratefully acknowledged.

2 - As a result of the development of the region's tourism destination brand name, the name ‘Far North Queensland' was changed into ‘Tropical North Queensland' (Brand Far North Queensland 1996).

3 - Since tourism is a demand-defined industry, it is not straightforward to identify businesses as mainly tourism related. As an indication of the number of tourism businesses in the region, membership of the regional tourism industry association Tourism Tropical North Queensland (TTNQ) of approximately 600 covers "90 to 95 percent of all tourism operators in the region who invest in marketing" (TTNQ, pers. comm.).

4 - One of the four large companies is different in its operations from the other three as it operates a sailing catamaran rather than a motorised vessel that takes passenger to a pontoon on the reef. Some operators also include the option of stopping over on one of the islands off Cairns.

5 - At the time of the investigation, a fourth large land-based operator had just exited the industry.

7 - These related to a range of studies of the tourism industry in Queensland and Australia wide.

8 - For an overview of qualitative analyses with respect to tourism, see Riley and Love (2000).

9 - While some of the land-based businesses also offer Reef tours, their operations are predominantly land-based.

10 - The size classification of the business was self-defined by respondents at the start of the interview. This was generally related to the number of employees, with a small business having approximately one to five employees, while a large business had more than 100 employees.

11 - Throughout this paper, respondents' quotes are presented in shaded boxes.

12 - Australian Tourism Exchange, Australia's largest forum for representations to domestic and overseas tourism wholesalers.

13 - As pointed out by an anonymous referee, there are parallels between the views of nature-based tourism operators and those of agricultural operators with respect to environmental issues.

14 - The Cairns section of the Great Barrier Reef is governed by the jurisdictions of both the Commonwealth and the State of Queensland. Management of the area is covered by the Commonwealth Great Barrier Reef Marine Park Act (1975) and the Queensland Marine Parks Act (1982) and their regulations. Queensland's land-based national parks and other protected areas are covered by the State's Nature Conservation Act 1992 and the Nature Conservation Regulation 1994.

15 - FNQTOA represents the region's tourism industry to various government authorities. It has covered a broad range of issues including land management, industrial relations, training, infrastructure and native title. Members meet on a monthly basis to discuss various current issues impacting on the region's tourism industry.

16 - While some tourism diversification was seen to be beneficial to the region, the environment would continue to be the main attraction.